<PAGE> 1
SECURITIES AND EXCHANGE
Washington, D. C.
-----------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
---- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------- -----------------
Commission File Number: 1-8641
------
COEUR D'ALENE MINES CORPORATION
(Exact name of registrant as specified on its charter)
IDAHO 82-0109423
- - ------------------------------ ---------------------------
(State or other jurisdiction of (I.R.S. Employer Ident.No.)
incorporation or organization)
P. O. Box I, Coeur d'Alene, Idaho 83816-0316
- - --------------------------------- ----------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (208) 667-3511
- - -------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
---- ----
--------------------
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of Issuer's classes of common stock, as of the latest
practicable date: Common stock, par value $1.00, of which 15,420,652 shares
were issued and outstanding as of August 5, 1994.
<PAGE> 2
COEUR D'ALENE MINES CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. Financial Information:
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -- 3-4
June 30, 1994 and December 31, 1993
Consolidated Statements of Operations -- 5-6
Three Months Ended June 30, 1994 and 1993
Six Months Ended June 30, 1994 and 1993
Consolidated Statements of Cash Flows -- 7
Six Months Ended June 30, 1994 and 1993
Notes to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of 11-17
Financial Condition and Results of Operations
PART II. Other Information.
Item 4. Submission of Matters to a Vote of Security-Holders 17
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES
</TABLE>
<PAGE> 3
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS June 30, December 31,
1994 1993
------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 12,756,093 $ 14,678,097
Short-term investments 147,097,672 70,221,106
Receivables 9,018,808 7,757,910
Refundable income taxes 3,197,645 1,924,065
Inventories 35,144,972 34,670,469
------------- -------------
Total Current Assets 207,215,190 129,251,647
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 84,753,563 81,007,505
Less accumulated depreciation 38,667,548 35,310,111
------------- -------------
46,086,015 45,697,394
MINING PROPERTIES
Operational mining properties 93,690,354 90,120,998
Less accumulated depletion 36,079,818 33,125,461
------------- -------------
57,610,536 56,995,537
Developmental properties 88,971,270 83,536,738
------------- -------------
146,581,806 140,532,275
OTHER ASSETS
Funds held in escrow 2,270,695 2,270,695
Notes receivable 158,559 355,069
Debt issuance costs, net of
accumulated amortization 8,610,458 4,708,372
Marketable equity securities 2,476,764 2,422,416
Other 1,667,916 470,469
------------- -------------
15,184,392 10,227,021
------------- -------------
$415,067,403 $325,708,337
============= =============
</TABLE>
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<PAGE> 4
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY June 30, December 31,
1994 1993
------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 1,401,109 $ 1,946,273
Accrued liabilities 4,321,670 5,265,232
Accrued interest payable 3,238,180 2,008,851
Accrued salaries and wages 3,409,271 2,898,486
Accrued litigation settlement 5,875,000 5,875,000
Accrued environmental settlement 1,230,000 1,230,000
Reserve for mine closure 274,629 494,800
Current portion of obligations
under capital leases 1,969,147 1,899,771
------------- -------------
Total Current Liabilities 21,719,006 21,618,413
OTHER LIABILITIES
6% Convertible Subordinated
Debentures 50,000,000 50,000,000
7% Convertible Subordinated
Debentures 75,000,000 75,000,000
6 3/8% Convertible Subordinated
Debentures 100,000,000
Obligations under capital leases 3,231,684 4,233,913
Other long-term liabilities 4,735,357 2,325,764
Deferred income taxes 1,429,034 1,681,542
------------- -------------
Total Long-Term Liabilities 234,396,075 133,241,219
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock, $1.00 par value
per share-authorized 10,000,000
shares, none outstanding
Common Stock, $1.00 par value per
share--authorized 60,000,000
shares, issued and outstanding
16,413,080 and 16,394,302 shares
(including 1,058,453 held as
treasury stock) 16,413,080 16,394,302
Capital surplus 179,101,154 181,038,631
Accumulated deficit (17,033,040) (13,100,942)
Repurchased and nonvested shares (13,415,134) (13,483,286)
Unrealized losses on short-
term investment securities (6,113,738)
------------- -------------
158,952,322 170,848,705
------------- -------------
$415,067,403 $325,708,337
============= =============
</TABLE>
-4-
<PAGE> 5
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
--------------------------------- ----------------------------------
1994 1993 1994 1993
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCOME
From mine operations:
Sales of concentrates
and dore' $ 19,463,913 $16,135,488 $ 39,673,495 $25,796,006
Less cost of mine
operations 16,788,680 14,554,849 34,318,840 23,709,315
------------- ------------ ------------- -------------
Gross profits 2,675,233 1,580,639 5,354,655 2,086,691
From manufacturing
operations:
Sale of industrial
products 2,827,223 2,528,391 5,513,139 4,848,735
Less cost of
manufacturing 2,510,887 2,245,117 5,020,450 4,340,528
------------- ------------ ------------- -------------
Gross profits 316,336 283,274 492,689 508,207
Interest and other income 3,032,618 1,436,636 4,618,840 2,718,229
------------- ------------ ------------- -------------
Total income 6,024,187 3,300,549 10,466,184 5,313,127
EXPENSES
Administration 950,362 822,108 2,541,071 1,798,169
Accounting and legal 434,985 778,648 855,925 1,362,262
General corporate 1,379,807 1,327,451 2,746,913 2,268,393
Mining exploration 1,215,186 387,519 1,951,510 888,791
Idle facilities 415,400 706,721 827,744 1,349,060
Interest 2,935,536 1,271,185 5,440,118 2,757,132
------------- ------------ ------------- -------------
Total expenses 7,331,276 5,293,632 14,363,281 10,423,807
------------- ------------ ------------- -------------
LOSS BEFORE TAXES AND
CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING (1,307,089) (1,993,083) (3,897,097) (5,110,680)
Provision (Benefit) for
income taxes 27,710 (985,946) 35,001 (2,122,860)
------------- ------------ ------------- -------------
LOSS BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING (1,334,799) (1,007,137) (3,932,098) (2,987,820)
Cumulative effect of
change in accounting
method 5,181,188
------------- ------------ ------------- ------------
NET INCOME (LOSS) $ (1,334,799) $(1,007,137) $ (3,932,098) $ 2,193,368
============= ============ ============= ============
</TABLE>
-5-
<PAGE> 6
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30 JUNE 30
----------------------------------- ----------------------------------
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
EARNINGS PER SHARE DATA
Weighted average number
of shares of Common
Stock outstanding 15,354,627 15,335,478 15,346,742 15,322,963
============ ============ ============ ============
Loss per share
before cumulative
effect of change in
accounting method $ (0.09) $ (0.07) $ (0.26) $ (0.20)
Cumulative effect of
change in accounting $ .34
------------ ------------ ----------- ------------
INCOME(LOSS) PER SHARE $ (0.09) $ (0.07) $ (0.26) $ 0.14
============ ============ ============ ============
Cash dividends per share $ 0.15 $ 0.15
============ ============
</TABLE>
See notes to consolidated financial statements.
-6-
<PAGE> 7
UNAUDITED
COEUR D'ALENE MINES CORPORATION
(An Idaho Corporation)
Coeur d'Alene, Idaho
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1994 and 1993
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES 1994 1993
-------------- --------------
<S> <C> <C>
Net income (loss) $ (3,932,098) $ 2,193,368
Add (less) noncash items:
Depreciation, depletion and
amortization 8,943,583 4,597,141
Cumulative adjustment FAS 109 (5,181,188)
Deferred income taxes (252,508) (2,168,250)
Deferred stripping costs (591,712)
Loss on disposition
of fixed assets 128,153 167,954
(Gain) on foreign currency hedging (1,193,959)
Loss on sale of short-term
investments 575,245
Change in operating assets and
liabilities:
Accounts receivable (1,340,519) (1,710,036)
Inventories (599,711) (4,601,407)
Accounts payable and
accrued liabilities (652,617) 4,955,855
Interest payable 1,229,329 (1,571,867)
-------------- --------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 2,313,186 (3,318,430)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment (3,257,526) (32,338,451)
Purchase of short-term investments (102,093,404) (51,026,366)
Proceeds from sale of short-term securities 17,560,691
Proceeds from sale of assets 253,784 454,173
Expenditures on operational
mining properties (3,772,100) (15,397,994)
Expenditures on developmental properties (5,434,533) (13,051,613)
Additions to funds held in escrow
Proceeds from other assets 96,404 85,549
-------------- --------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (96,646,684) (111,274,702)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from offering of 6 3/8%
Convertible Subordinated Debentures 95,647,541
Retirement of obligations under capital
leases (932,853) (873,679)
Payment of cash dividends (2,303,194) (2,297,520)
-------------- --------------
NET CASH USED IN FINANCING ACTIVITIES 92,411,494 (3,171,199)
-------------- --------------
DECREASE IN CASH AND
CASH EQUIVALENTS (1,922,004) (117,764,331)
Cash and cash equivalents at beginning
of year 14,678,097 134,106,948
-------------- --------------
CASH AND CASH EQUIVALENTS AT
JUNE 30, 1994 AND 1993 $ 12,756,093 $ 16,342,617
============== ==============
</TABLE>
See notes to consolidated financial statements.
-7-
<PAGE> 8
UNAUDITED
Coeur d'Alene Mines Corporation
and Subsidiaries
Notes to Consolidated Financial Statements
NOTE A: Inventories are composed of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Mining:
Ore in process and on leach pads $28,402,824 $27,958,186
Dore' inventory 1,744,670 1,947,294
Supplies 3,138,240 3,356,544
------------ ------------
33,285,734 33,262,024
Manufacturing:
Raw materials 1,170,715 755,206
Finished goods 688,523 653,239
------------ ------------
1,859,238 1,408,445
------------ ------------
$35,144,972 $34,670,469
============ ============
</TABLE>
Inventories of ores on leach pads and in the milling process are
valued based on actual costs incurred to place such ore into production, less
costs allocated to minerals recovered through the leaching and milling
processes. Dore' inventory includes product at the mine site and product held
by refineries. All other inventories are stated at the lower of cost or
market, cost being determined using the first in, first out and weighted
average cost methods.
NOTE B:
Effective January 1, 1994, the Company changed its method of
accounting for debt and equity securities by adopting Statement of Financial
Accounting Standards (FAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". FAS No. 115 requires the use of fair value accounting.
The Company has classified its short term investments and marketable securities
as available for sale, according to the provisions of the new pronouncement.
Accordingly, unrealized holding gains and losses on such securities are
excluded from earnings and reported as a separate component of shareholders'
equity until realized.
NOTE C:
On April 30, 1993, the Company acquired Cyprus Gold New Zealand
Limited, for approximately $54 million in cash. The acquisition has been
accounted for as a purchase. The following consolidated results of the
Company's operations assume that the acquisition took place at the beginning of
the period presented.
-8-
<PAGE> 9
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
(In thousands except for June 30, 1993 June 30, 1993
per share amounts) -------------- --------------
<S> <C> <C>
Revenues $24,827 42,153
Net loss before cumulative
effect of change in
accounting $(1,534) (3,667)
Net income $ 1,534 1,514
Earnings per share data:
Loss per shareholder before
cumulative effect of
change in accounting $ (.10) (.24)
Net income per share $ .10 .10
</TABLE>
NOTE D:
During the first quarter, the Company effected an offering of $100
million ($96,750,000 net to the Company after underwriter discount) of 6 3/8%
Convertible Subordinated Debentures Due 2004 which are convertible into shares
of Common Stock on or before January 31, 2004, unless previously redeemed, at a
conversion price of $26.20 per share. The Company is required to make semi-
annual interest payments. The debentures are redeemable at the option of the
Company on or after January 31, 1997. The debentures have no other funding
requirements until maturity. The debentures mature January 31, 2004.
NOTE E:
Effective January 1, 1993, the Company changed its method of accounting
for income taxes by adopting Statement of Financial Accounting Standards (FAS)
No. 109, "Accounting for Income Taxes." FAS No. 109 requires an asset and
liability approach to accounting for income taxes and establishes criteria for
recognizing deferred tax assets. Accordingly, the Company adjusted its
existing deferred income tax assets and liabilities to reflect current
statutory income tax rates and previously unrecognized tax benefits related to
federal and certain state net operating loss carryforwards. The Statement also
contains new requirements regarding balance sheet classification and prior
business combinations. Hence, the Company adjusted the carrying values of
Coeur Rochester, Inc. acquired in 1986 and CDE Chilean Mining Corp. acquired in
1989 to reflect the gross purchase value previously reported net-of-tax.
The cumulative effect of the accounting change on prior years at January
1, 1993 is a non-recurring gain of $5,181,188, or $.34 per share, and is
included in the accompanying Consolidated Statement of Operations for the six
months ended June 30, 1993. Other than the cumulative effect, the accounting
change had no material effect on the operating results for the three months and
six months ended June 30, 1993.
-9-
<PAGE> 10
The Company's tax expense for the second quarter and first half of 1994
results primarily from state tax liabilities. There is no provision for
Federal income taxes in the second quarter or first half of 1994 due to net
operating losses incurred.
NOTE F:
Certain reclassifications of prior year balances have been made to
conform to current year classifications.
NOTE G:
Other than as stated in the notes above, in the opinion of management,
the foregoing unaudited financial statements include all adjustments,
consisting of normal recurring accruals, necessary to a fair presentation of
the results of operations of the periods shown.
-10-
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The results of the Company's operations are significantly affected by
the market prices of gold and silver which may fluctuate widely and are
affected by many factors beyond the Company's control, including interest
rates, expectations regarding inflation, currency values, governmental
decisions regarding the disposal of precious metal stockpiles, global and
regional political and economic conditions, and other factors. The Company's
currently operating mines are the Rochester Mine, which it wholly owns and
operates, and the Golden Cross Mine, in which the Company has an 80% operating
interest.
The depressed level of silver prices led to the suspension of mining
activity at the Galena Mine in July 1992 (during which month the average price
of silver was $3.95 per ounce) and at the Coeur Mine in April 1991 (during
which month the average price of silver was $3.97 per ounce). Any resumption
of mining at those mines will require the affirmative decision of Asarco,
Incorporated, the operator of those mines, to recommence operations there.
On July 19, 1994, the Company's Board of Director's approved
construction of the Fachinal Project. Construction of the new mine is expected
to take 18 months to complete and is expected to produce, in its first year,
41,000 ounces of gold and 2.6 million ounces of silver. Total project
construction is expected to cost $41.8 million.
The Company plans to continue its developmental activities at the
Kensington Property. A production decision relating to the Kensington Property
is subject to the approval by the Company and its joint venture partner, a
market price of gold of at least $400 per ounce and the receipt of certain
required permits. The market price of gold (London final) on August 5, 1994
was $378.60 per ounce. With respect to the permits, the Company is unable to
control the timing of their issuance. However, it is anticipated that an EPA
Technical Assistance Report will be furnished to the Army Corps of Engineers in
early September 1994, which will lead to the issuance by the Corps of its
section 404 permit in due course.
The Company plans, in connection with its evaluation of potential
acquisition candidates, to focus primarily upon mining properties and
businesses that are operational or expected to become operational in the near
future so that they can reasonably be expected to contribute to the Company's
near-term cash flow from operations.
-11-
<PAGE> 12
The significant increase in the Company's mining exploration expenses in
the first half of 1994 over the prior year's comparable period reflects the
Company's efforts to expand its ore reserve base.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1994, Compared to Three Months Ended
June 30, 1993
SALES AND GROSS PROFITS
Sales of concentrates and dore' increased by $3,328,425, or 21%, for the
second quarter of 1994 over the same quarter of 1993 and was primarily
attributable to increased production as a result of the Golden Cross Mine
operating for the entire quarter in 1994 compared to a partial quarter in 1993
and an increase in metals prices. The Golden Cross Mine was acquired on April
30, 1993. Silver and gold prices averaged $5.38 and $381.44 per ounce,
respectively, in the second quarter of 1994 compared with $4.26 and $360.41 per
ounce, respectively, in the second quarter of 1993. In the second quarter of
1994, the Company produced 1,419,181 ounces of silver and 31,523 ounces of gold
compared to 1,475,750 ounces of silver and 30,603 ounces of gold in the second
quarter of 1993.
The cost of mine operations for the second quarter of 1994 increased by
$2,233,831, or 15%, above the prior year's comparable quarter and is primarily
attributable to the acquisition of the Golden Cross Mine. Mine operations
gross profit as a percent of sales increased from 10% in the quarter ended June
30, 1993 to 14% in the quarter ended June 30, 1994. As a result, gross profits
from mine operations increased by $1,094,594, or 69%.
The cash costs of production per ounce of gold at the Golden Cross Mine
amounted to $269.04 per ounce in the quarter ended June 30, 1994, compared to
$229.92 per ounce in the prior year's comparable quarter. The increase was
primarily attributable to the presence of a harder grinding ore in the open pit
requiring more milling and chemicals in the processing. The cash costs of
production in the second quarter of 1994, however, decreased from $299.83 per
ounce cash costs incurred in the first quarter of 1994. The cash costs of
production per ounce of silver on a silver equivalent basis at the Rochester
Mine amounted to $3.65 in the quarter ended June 30, 1994, compared to $3.51
per ounce in the quarter ended June 30, 1993.
The sales of manufactured products, which consist of lightweight
flexible hose and duct and metal tubing, increased by $298,832, or 12%, in the
second quarter of 1994 above the second quarter of 1993. Cost of manufacturing
increased by $265,770, or 12%, compared with the second quarter of 1993. As a
result, gross profits from manufacturing increased by $33,062, or 12%, in the
second quarter of 1994 from the prior year's second quarter.
-12-
<PAGE> 13
OTHER INCOME
Other income increased by $1,595,982, or 111%, the second quarter of
1994 compared to the second quarter of 1993. The difference is primarily the
result of an increase in the level of the Company's cash and securities
portfolio and unrealized foreign exchange gains on outstanding contracts at
June 30, 1994.
As a result of the above, the Company's total income increased by
$2,723,638, or 82%, in the second quarter of 1994 compared to the second
quarter of 1993.
EXPENSES
For the second quarter of 1994, total expenses increased by $2,037,644,
or 38%, over the prior year's comparable quarter. The increase is primarily
attributable to (i) an increase in interest expense of $1,664,351, or 131%,
primarily resulting from the issuance of $100 million principal amount of
6-3/8% Convertible Subordinated Debentures in January and February 1994, (ii)
an increase of $827,667, or 214%, in mining exploration expenses incurred in
connection with the Company's efforts to increase ore reserves, and (iii)
increases in administration and general corporate expenses.
INCOME (LOSS) BEFORE TAXES AND ACCOUNTING CHANGE
As a result of the above, the Company's loss before income taxes and the
cumulative effect of a change in accounting amounted to $1,307,089 for the
second quarter of 1994 compared to a loss before income taxes and the
cumulative effect of a change in accounting of $1,993,083 for the second
quarter of 1993. The Company reported income tax expense (benefit) for the
second quarter of 1994 of $27,710 compared to $(985,946) for the same period of
1993. As a result, the Company reports a loss before the cumulative effect of
a change in accounting of $1,334,799, or $.09 per share, for the second quarter
of 1994 compared with $1,007,137, or $.07 per share, for the 1993's comparable
quarter.
NET INCOME
As a result of the above, the Company reports a net loss of $1,334,799,
or $.09 per share, for the second quarter of 1994 compared with $1,007,137, or
$.07 per share, for the second quarter of 1993.
Six Months Ended June 30, 1994, Compared to Six Months Ended June 30,
1994
SALES AND GROSS PROFITS
Sales of concentrates and dore' increased by $13,877,489, or 54%, for
the six months ended June 30, 1994 over the same period of 1993 and was
primarily attributable to increased production as a result of the Golden
-13-
<PAGE> 14
Cross Mine operating for the entire period in 1994 compared to the same period
in 1993. Silver and gold prices averaged $5.33 and $382.87 per ounce,
respectively, in the first six months of 1994 compared to $3.96 and $344.84 per
ounce, respectively, in the same period in 1993. During the first six months
of 1994, the Company produced 2,929,578 ounces of silver and 63,100 ounces of
gold compared to 2,812,119 ounces of silver and 47,750 ounces of gold in the
first six months of 1993. The increase in silver production is due to
increased production at the Company's Rochester Mine. The increase in gold
production is due to the Company's acquisition of an 80% interest in the Golden
Cross Mine effective April 30, 1993.
The cost of mine operations in the first six months of 1994 increased by
$10,609,525, or 45%, over the first six months of 1993. As a result, gross
profit from mine operations increased by $3,267,964, or 157%, in the first six
months of 1994 from 1993's comparable period. Mine operations gross profit as
a percent of sales increased from 8% in the six months ended June 30, 1993 to
13% in the six months ended June 30, 1994. The increase was primarily
attributable to the increases in silver and gold prices during the six months
ended June 30, 1994, from the prior year's comparable period.
The cash costs of production per ounce of gold at the Golden Cross Mine
amounted to $283.26 per ounce in the six months ended June 30, 1994, compared
to $229.92 in the prior year's comparable six month period. The increase was
primarily attributable to the presence of a harder grinding ore in the open pit
requiring more milling and chemicals in the processing. As stated above,
however, the cash costs incurred in the second quarter of 1994 were lower than
the cash costs incurred in the first quarter of 1994. The cash costs of
production per ounce of silver on a silver equivalent basis at the Rochester
Mine amounted to $3.64 per ounce in the six months ended June 30, 1994,
compared to $3.59 in the six months ended June 30, 1993.
Sales of industrial products in the first six months of 1994 increased
by $664,404, or 14%, compared to the first six months of 1993. Cost of
manufacturing increased by $679,922, or 16%, in the first half of 1994,
compared to the prior year's comparable period. As a result, gross profit from
manufacturing for the first six months of 1994 decreased by $15,518, or 3%,
compared to the first six months of 1993.
OTHER INCOME
Interest and other income in the first half of 1994 increased by
$1,900,611, or 70%, compared to the first half of 1993. The increase was
primarily due to an increase in the level of the Company's cash and securities
portfolio and unrealized foreign exchange gains on outstanding contracts at
June 30, 1994.
As a result of the above, the Company's total income increased by
$5,153,057, or 97%, in the six months ended June 30, 1994, over the prior
year's comparable quarter.
-14-
<PAGE> 15
EXPENSES
Total expenses in the first half of 1994 increased by $3,939,474, or
38%, over the prior year's comparable six-month period. The increase is
primarily attributable to (i) an increase in interest expense of $2,682,986, or
97%, primarily resulting from the issuance of $100 million principal amount of
6-3/8% Convertible Subordinated Debentures in January and February 1994, (ii)
an increase of $1,062,719, or 120%, in mining exploration expenses incurred in
connection with the Company's efforts to increase ore reserves, and (iii)
increases in administration and general corporate expenses.
INCOME (LOSS) BEFORE TAXES AND ACCOUNTING CHANGE
As a result of the above, the Company's loss before income taxes and the
cumulative effect of a change in accounting amounted to $3,897,097 in the first
six months of 1994 compared to $5,110,680 in the first six months of 1993. The
Company reported income tax expense (benefit) of $35,001 for the first six
months of 1994, compared to ($2,122,860) in the first six months of 1993. As a
result, the Company reported a net loss before the cumulative effect of a
change in accounting of $3,932,098, or $.26 per share, in the first six months
of 1994, compared to a net loss of $2,987,820, or $.20 per share, in the first
six months of 1993.
CHANGE IN ACCOUNTING
Effective January 1, 1993, the Company changed its method of accounting
for income taxes by adopting the mandatory Statement of Financial Accounting
Standards (FAS) 109, "Accounting for Income Taxes." FAS 109 requires an asset
and liability approach to accounting for income taxes and establishes criteria
for recognizing deferred tax assets. Accordingly, the Company adjusted its
existing deferred income tax assets and liabilities to reflect current
statutory income tax rates and previously unrecognized tax benefits related to
federal and certain state net operating loss carry forwards. The cumulative
effect of the accounting change on prior years at January 1, 1993, resulted in
a non-recurring gain of $5,181,188, or $.34 per share, and is included in the
results of operations for the six months ended June 30, 1993.
NET INCOME (LOSS)
As a result of the above, the Company reported a net loss of $3,932,098,
or $.26 per share, in the first six months of 1994, compared to net income of
$2,193,368, or $.14 per share, in the prior year's comparable six-month period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 1994 was approximately $185.5
million compared to approximately $107.6 million at December 31,
-15-
<PAGE> 16
1993. The ratio of current assets to current liabilities was 9.5 to 1 at June
30, 1994, compared with 6.0 to 1 at December 31, 1993.
The increase in the Company's working capital at June 30, 1994 compared
to December 31, 1993 is primarily attributable to the Company's sale in January
and February 1994 of an aggregate of $100,000,000 principal amount of 6 3/8%
Convertible Subordinated Debentures Due 2004 (the "Debentures"). The
Debentures were issued by the Company in connection with an offering to
"qualified institutional buyers" as defined in Rule 144A under the Securities
Act and to certain non-U.S. persons in reliance upon Regulation S under the
Securities Act. The Company plans to use the approximately $95.7 net proceeds
from such offering for general corporate purposes, including the possible
acquisition of, or investment in, additional precious metals mines, properties
or businesses, and for possible developmental activities on new or existing
mining properties. The Company's acquisition efforts are primarily focused
upon operating precious metals mines and precious metals properties or
businesses that are expected to become operational in the near future. The
Company currently is engaged in the review and investigation of opportunities
for expansion of its business through acquisitions, investments or other
transactions. While preliminary agreements have been entered into with respect
to certain proposed acquisitions, the consummation of such acquisitions is
subject to significant contingencies. The Company invested the proceeds of the
above offering in interest-bearing marketable securities and money market
obligations, and plans to continue such investments pending the use of the
proceeds of that offering as discussed above.
Net cash provided by (used in) operating activities for the first six
months of 1994 was $2,313,186 compared with $(3,318,430) for the first six
months of 1993. A total of $96,646,684 of cash was used in investing
activities in the six months of 1994, compared to $111,274,702 in the first six
months of 1993. Of the $96,646,684 used in investing activities during the
first six months of 1994, $102.1 million relates to the purchase of investment
grade intermediate term investments. The Company's financing activities
provided $92,411,494 of cash during the first six months of 1994 compared with
$3,171,199 used in financing activities for the first six months of 1993. As a
result of the above, the Company's net cash decrease for the first six months
of 1994 was $1,922,004 compared with a net cash decrease of $117,764,331 for
the first six months of 1993. The net cash decrease for the first half of 1993
was primarily due to the use of $111,274,702 in investing activities.
In view of the recent, significant increase in the Company's capital
resources described above, the Company terminated its $38 million revolving
line of credit agreement with a syndicate of banks in June 1994. On June 8,
1994, the Company entered into a credit agreement with Seattle First National
Bank providing for a maximum of $10 million letter of credit.
-16-
<PAGE> 17
For the quarters ended June 30, 1994 and 1993, the Company expended
$1,236,766 and $806,367, respectively, in connection with environmental
compliance activities at its operating properties. At June 30, 1994, the
Company had expended a total of approximately $4.3 million on environmental and
permitting activities at the Kensington property, which expenditures have been
capitalized as part of its development cost.
On June 24, 1994, the U.S. District Court for the District of Idaho
approved the proposed settlement (the "Settlement") of Kassover v. Coeur
d'Alene Mines Corporation et al. (the "Lawsuit"), a class action instituted
against the Company and others in 1990. Pursuant to the Settlement, a total of
up to 220,083 shares of Common Stock will be issued by the Company in exchange
for the claims of the members of the plaintiff class (the "Claimants") and
their counsel. The number of such shares was determined by dividing $4 million
by the average daily closing price of the Common Stock for the five business
days preceding the "fairness hearing" relating to the Settlement held on June
16, 1994. The Company issued 66,025 shares to counsel for the claimants in
late July 1994, and plans to issue the balance of up to 154,058 shares
following the processing of the Claimants' claims, which is expected to be in
September or October 1994.
On July 19, 1994, the Company's Board of Directors approved the
construction of the Fachinal project following the completion by the
independent engineering firm of Fluor Daniel Wright of a detailed feasibility
study. Pursuant to that study, the cost to complete Fachinal is estimated to
be $41.8 million. The Company plans to seek funding for that construction on a
project financing basis.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
The Company's Annual Meeting of Shareholders was held on May 10, 1994.
Messrs. Dennis E. Wheeler, Joseph C. Bennett, Duane B. Hagadone, James
J. Curran, James A. Sabala, James A. McClure and Jeffery T. Grade were
nominated and elected to serve as members of the Board for one year or until
their successors are elected and qualified, by a vote of approximately 13.4
million shares (ranging from 13,408,142 to 13,457,130) for, and no shares
voting against or abstaining.
Shareholders ratified the selection of Ernst & Young to serve as the
Company's public accountants for the current fiscal year by a vote of
13,283,442 shares for, 29,799 shares against, with 127,101 shares abstaining.
-17-
<PAGE> 18
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibit is filed herewith:
10 Credit Agreement, dated June 8, 1994 between
Registrant/Seattle-First National Bank.
(b) Reports on Form 8-K
None
-18-
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COEUR D'ALENE MINES CORPORATION
-------------------------------
(Registrant)
Dated August 12, 1994 /s Dennis E. Wheeler
---------------------------
DENNIS E. WHEELER
Chairman, President and
Chief Executive Officer
Dated August 12, 1994 /s James A. Sabala
---------------------------
JAMES A. SABALA
Senior Vice President
(Principal Financial and
Accounting Officer)
<PAGE> 20
COEUR D'ALENE MINES CORPORATION
INDEX TO EXHIBITS
FORM 10-Q FOR PERIOD ENDED JUNE 30, 1994
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. PAGE NO.
- - ----------- ----------
<S> <C> <C>
10 Credit Agreement between Coeur D'Alene Mines Corporation
and Seattle-First National Bank 21
</TABLE>
-20-
<PAGE> 1
EXHIBIT 10
CREDIT AGREEMENT
BETWEEN
COEUR D'ALENE MINES CORPORATION
AND
SEATTLE-FIRST NATIONAL BANK
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Additional Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------------------
1.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------
1.3 Available Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
----------------
1.4 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------
1.5 Capitalized Lease Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------------------------
1.6 Cash Equivalent Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------------------------
1.7 Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
----------------
1.8 Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------------
1.9 Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------
1.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
1.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----
1.12 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----
1.13 Guarantor(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------
1.14 Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
1.15 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------
1.16 Initial Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------
1.17 Letter(s) of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------------
1.18 Letter of Credit Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------
1.19 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------------
1.20 Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------
1.21 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------
1.22 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----
1.23 Prime Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------
1.24 Significant Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
----------------------
1.25 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------
1.26 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------
1.27 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
------------------
1.28 Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------------
ARTICLE 2
LETTER OF CREDIT . . . . . . . . . . . . . . 5
2.1 Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------
2.2 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----
2.3 Yield Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------
ARTICLE 3
GUARANTIES . . . . . . . . . . . . . . . 6
ARTICLE 4
CONDITIONS OF LENDING . . . . . . . . . . . . 6
4.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------
4.2 Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------
4.3 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------
4.4 Termination of Prior Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------------------
4.5 Proof of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------
4.6 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------------------
4.7 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 5
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 7
5.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------
5.2 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------------
5.3 No Legal Bar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------------
5.4 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------------
5.5 Liens and Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------------------
5.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------
5.7 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------------
5.8 Employee Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
---------------------
5.9 Misrepresentations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------------
5.10 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------
5.11 No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------------
ARTICLE 6
AFFIRMATIVE COVENANTS . . . . . . . . . . . . 9
6.1 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------
6.2 Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------------
6.3 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------------
6.4 Debt Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------
6.5 Cash Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------
6.6 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------
6.7 Maintenance of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------------------
6.8 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------------
6.9 Ownership of Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------------------
6.10 Access to Premises and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------------------------------
6.11 Notice of Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----------------
6.12 Payment of Debts and Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--------------------------
6.13 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------
6.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------
6.15 Additional Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------
ARTICLE 7
EVENTS AND CONSEQUENCES OF DEFAULT . . . . . . . . . 13
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-----------------
(a) Nonpayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------
(b) Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------
(c) ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-----
(d) Failure to Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------
(e) Defaults on Other Obligations. . . . . . . . . . . . . . . . . . . . . . . . 13
-----------------------------
(f) Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------
(g) Loss, Destruction, or Condemnation of Property . . . . . . . . . . . . . . . 13
----------------------------------------------
(h) Attachment Proceedings and Insolvency. . . . . . . . . . . . . . . . . . . . 14
-------------------------------------
(i) Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------
(j) Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------------
7.2 Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------
7.3 Alleged Default by Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-----------------------
ARTICLE 8
MISCELLANEOUS . . . . . . . . . . . . . . 15
8.1 Manner of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
------------------
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------
8.3 Documentation and Administration Expenses . . . . . . . . . . . . . . . . . . . . . . 16
-----------------------------------------
8.4 Collection Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------------
8.5 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------
8.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------
8.7 Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------
8.8 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------
8.9 Mandatory Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------
8.10 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------
8.11 Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------------
</TABLE>
EXHIBITS:
Exhibit A -- Form of CFO Certificate
- ii -
<PAGE> 4
CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is made between Coeur d'Alene
Mines Corporation, an Idaho corporation ("Borrower"), and Seattle-First
National Bank, a national banking association (including its successors and/or
assigns, "Bank"). The parties agree as follows:
ARTICLE 1
DEFINITIONS
All terms defined below shall have the meaning indicated. All
references in this Agreement to:
(a) "dollars" or "$" shall mean U.S. dollars. Any item
denominated in a currency other than U.S. dollars, shall be converted
into U.S. Dollars at Bank's spot rate of exchange between such
currency and U.S. dollars, as quoted on the date of calculation.;
(b) "Article," "Section," or "Subsection" shall mean
articles, sections, and subsections of this Agreement, unless
otherwise indicated;
(c) terms defined in the Washington version of the
Uniform Commercial Code, R.C.W. Section 62A.9-101, et seq. ("UCC"),
and not otherwise defined in this Agreement, shall have the meaning
given in the UCC; and
(d) an accounting term not otherwise defined in this
Agreement shall have the meaning assigned to it under GAAP.
1.1 Additional Guarantors shall have the meaning given in Section
6.14.
1.2 Affiliate of a Person shall mean any other Person which,
directly or indirectly, controls or is controlled by or under common control
with such Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly or
indirectly, power:
(a) to vote 10% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of
directors or managing general partners of such Person; and
(b) to direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
1.3 Available Amount shall mean at any time the amount of the
Credit Limit minus the face amount of all Letters of Credit outstanding.
- 1 -
<PAGE> 5
1.4 Business Day shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks in Seattle, Washington, are authorized
or required by law to close.
1.5 Capitalized Lease Liabilities shall mean all monetary
obligations of Borrower or any Subsidiary under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as capitalized
leases, and the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP, and the stated maturity thereof
shall be the date of the last payment of rent or any other amount due under
such lease prior to the first date upon which such lease may be terminated by
the lessee without payment of a penalty.
1.6 Cash Equivalent Investment shall mean, at any date:
(a) any evidence of Indebtedness, maturing not more than
one year after such date, issued or guaranteed by the United States
Government;
(b) commercial paper, maturing not more than nine months
from the date of issue, which is issued by Bank or any other
corporation (other than an Affiliate of Borrower or of any Guarantor)
organized under the laws of any State of the United States or of the
District of Columbia and rated A-1 by Standard & Poor's Corporation or
P-1 by Moody's Investors Service, Inc.;
(c) any certificate of deposit or bankers acceptance,
maturing not more than one year after such date, which is issued by
Bank or any other commercial banking institution that is a member of
the Federal Reserve System and has a combined capital and surplus and
undivided profits of not less than US$500,000,000 (for purposes of
this Section, an "Approved Bank"); or
(d) any repurchase agreement entered into with Bank or
any Approved Bank which repurchase agreement is:
(i) secured by a fully perfected security
interest in any obligation of the type described in any of
clauses (a) through (c) above, and
(ii) has a market value at the time such
repurchase agreement is entered into of not less than 100% of
the repurchase obligation of Bank or such Approved Bank.
1.7 Cash Equivalents shall mean all of Borrower's consolidated
cash, Cash Equivalent Investments and all debt and equity marketable security
investments,
- 2 -
<PAGE> 6
stated at the lower of cost or market, made in compliance with Borrower's board
of directors-adopted, Bank-reviewed investment policy.
1.8 Current Assets shall mean all consolidated assets of Borrower,
on a GAAP basis, which may be properly classified as current assets in
accordance with GAAP.
1.9 Current Liabilities shall mean all consolidated indebtedness
of Borrower, on a GAAP basis, maturing on demand or within a period of one year
from the date when Borrower's current liabilities are determined and which may
be properly classified as current liabilities in accordance with GAAP.
1.10 Environmental Laws shall mean all applicable federal, state,
or local statutes, laws, ordinances, codes, rules, regulations, and guidelines
(including consent decrees and administrative orders) relating to public health
and safety and protection of the environment issued in the U.S. by any federal,
state, or local authority or in any other jurisdiction by any similar
governmental or other authority.
1.11 ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended.
1.12 GAAP shall mean generally accepted accounting principles as in
effect from time to time in the United States and as consistently applied by
Borrower.
1.13 Guarantor(s) shall mean the Initial Guarantors and each
Additional Guarantor.
1.14 Hazardous Material shall mean any substance or material
defined or designated as hazardous or toxic wastes, hazardous or toxic
material, a hazardous, toxic or radioactive substance or other similar term by
any applicable federal, state, or local statute, regulation, or ordinance now
or hereafter in effect.
1.15 Indebtedness shall mean, as to any Person, (a) all
consolidated obligations, on a GAAP basis, included in the liability section of
a balance sheet of Borrower, and (b) all obligations of such Person which
should be, in accordance with GAAP, recorded as Capitalized Lease Liabilities.
1.16 Initial Guarantors shall mean each of the following
corporations, jointly and severally, Coeur Alaska, Inc., a Delaware
corporation, CDE Chilean Mining Corporation, a Delaware corporation, Callahan
Mining Corporation, an Arizona corporation, Coeur Gold New Zealand, Limited., a
New Zealand corporation,
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Coeur New Zealand, Inc., a Delaware corporation, and Coeur-Rochester, Inc., a
Delaware corporation.
1.17 Letter(s) of Credit shall have the meaning assigned in
Article 2.
1.18 Letter of Credit Balance shall mean the aggregate outstanding
liability of Bank at any given time under all combined Letters of Credit.
1.19 Loan Documents shall mean collectively this Agreement, the L/C
Agreements, and all other documents, instruments, and agreements now or later
executed in connection with this Agreement.
1.20 Obligations shall mean Borrower's obligation to reimburse Bank
for all amounts drawn under the Letters of Credit, and all fees, costs,
expenses, and indemnifications due to Bank under this Agreement.
1.21 Person shall mean any individual, partnership, corporation,
business trust, unincorporated organization, joint venture, or any governmental
entity, department, agency, or political subdivision.
1.22 Plan shall mean any employee benefit plan or other plan
maintained for Borrower's employees and covered by Title IV of ERISA, excluding
any plan created or operated by or for any labor union.
1.23 Prime Rate shall mean the floating commercial loan reference
rate of Bank, publicly announced from time to time as its "prime rate"
(calculated on the basis of actual number of days elapsed over a year of 360
days), with any change in the Prime Rate to be effective on the date the "prime
rate" changes.
1.24 Significant Subsidiary shall mean, at any date, each
Subsidiary that:
(a) accounted for at least 5% of consolidated revenues of
Borrower and its Subsidiaries or 5% of consolidated earnings of
Borrower and its Subsidiaries before interest and taxes, in each case
for the fiscal quarter of Borrower most recently ended on or prior to
such date; or
(b) has assets which represent at least 5% of the
consolidated assets of Borrower and its Subsidiaries as of the last
day of the last fiscal quarter of Borrower most recently ended on or
prior to such date;
all of which shall be as reflected on the financial statements of Borrower for
the period, or as of the date, in question.
1.25 Subordinated Debt shall mean all Indebtedness of Borrower
which is subordinated to the repayment of the Obligations on terms, and
pursuant to documentation, in form and substance satisfactory to Bank, as
necessary to assure subordination.
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1.26 Subsidiary shall mean, with respect to any Person, any
corporation of which more than 50% of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person. Except as otherwise
indicated herein, references to Subsidiaries shall refer to Subsidiaries of
Borrower.
1.27 Tangible Net Worth shall mean the consolidated net worth of
Borrower and its Subsidiaries after subtracting therefrom the aggregate amount
of any intangible assets of Borrower and its Subsidiaries including goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks, and brand names.
1.28 Termination Date shall mean July 1, 1997, or such earlier date
upon which Bank's commitment to lend is terminated pursuant to Subsection
7.2(a).
ARTICLE 2
LETTER OF CREDIT
2.1 Issuance. Upon Borrower's execution of Bank's standard form
Application and Agreement for Standby Credit ("L/C Agreement"), and a statement
of purpose for the letter of credit to be issued, Bank shall issue for
Borrower's account standby letters of credit (together with all letters of
credit issued by Bank for Borrower's account and outstanding prior to the date
of this Agreement, "Letter(s) of Credit") in amounts not to exceed $10,000,000
in the aggregate. Each Letter of Credit shall have a maximum tenor of 360
days, and if "evergreen" shall be cancelable by Bank within 60 days of each
anniversary date. If there is a draw under a Letter of Credit, Borrower shall
on demand immediately reimburse Bank for the amount of the draw, together with
interest on the amount drawn, from the date of draw until paid, at a floating
rate equal to the Prime Rate plus 2% per annum. Bank shall in addition have
all rights provided in the L/C Agreement. Any default in an L/C Agreement
shall be a Default.
2.2 Fees. Borrower shall pay to Bank in advance, upon issuance of
each Letter of Credit and on each anniversary of such issuance, an annual fee
of 1.25% per annum on the outstanding balance of the Letter of Credit on the
date payment is due. Borrower shall additionally, on demand, pay transaction
fees according to Bank's then-outstanding standard fee schedule on all drafts,
transfers,
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extensions, and other transactions in regard to the Letters of Credit, and
reimburse Bank for all out-of-pocket costs, legal fees, and expenses.
2.3 Yield Indemnity. If any law or regulation imposes or
increases any reserve, special deposit, or similar requirement against letters
of credit issued by Bank or subjects Bank to any tax, charge, fee, deduction,
or withholding of any kind in regard to the Letters of Credit, Borrower shall
promptly on demand indemnify Bank for any such increased costs, taxes, or
charges (other than taxes based on Bank's gross or net income).
ARTICLE 3
GUARANTIES
The Obligations shall be absolutely and unconditionally guaranteed by
the Initial Guarantors and the Additional Guarantors, jointly and severally, in
form satisfactory to Bank. Borrower authorizes Bank to release to any present
or future guarantor all information the Bank possesses concerning Borrower or
any loans, credits, or other financial accommodations made to Borrower by Bank.
ARTICLE 4
CONDITIONS OF LENDING
Bank's obligation to issue the initial Letter of Credit is subject to
the conditions precedent listed in Sections 4.1 through 4.5, and to issue
subsequent Letters of Credit is subject to the conditions precedent listed in
Sections 4.6 and 4.7, unless waived by Bank in writing:
4.1 Authorization. Borrower shall have delivered to Bank a
certified copy of the resolution of Borrower's board of directors authorizing
the transactions contemplated by this Agreement and the execution, delivery,
and performance of all Loan Documents, together with appropriate certificates
of incumbency. Each corporate guarantor shall have delivered to Bank a
certified copy of a resolution of such guarantor's board of directors,
satisfactory in form to Bank, authorizing its guaranty.
4.2 Documentation. Borrower shall have executed and delivered to
Bank all documents to reflect the existence of the Obligations.
4.3 Guaranties. Each guarantor shall have executed and delivered
its guaranty to Bank, and each such guaranty shall remain in full force and
effect.
4.4 Termination of Prior Facility. Borrower shall have
terminated, and shall have no further letters of credit or advances outstanding
under, the $38,000,000 credit facility evidenced by the Amended and Restated
Loan Agreement
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dated June 17, 1993, among Borrower, various banks, Bank as "Issuing Bank," and
N.M. Rothschild & Sons Limited as "Agent."
4.5 Proof of Insurance. Proof of insurance as required by Section
6.14 has been provided to Bank.
4.6 Representations and Warranties. The representations and
warranties made by Borrower in the Loan Documents and in any certificate,
document, or financial statement furnished at any time shall continue to be
true and correct, except to the extent that such representations and warranties
expressly relate to an earlier date.
4.7 Compliance. No Default or other event which, upon notice or
lapse of time or both would constitute a Default, shall have occurred and be
continuing, or shall exist after giving effect to the advance of credit to be
made.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
To induce Bank to enter into this Agreement, Borrower represents,
warrants, and covenants to Bank as follows:
5.1 Existence. Borrower is in good standing as a corporation
under the laws of the state of its incorporation, has the power, authority, and
legal right to own and operate its property or lease the property it operates
and to conduct its current business; and is qualified to do business and is in
good standing in all other jurisdictions where the ownership, lease, or
operation of its property or the conduct of its business requires such
qualification.
5.2 Enforceability. The Loan Documents, when executed and
delivered by Borrower, shall be enforceable against Borrower in accordance with
their respective terms.
5.3 No Legal Bar. The execution, delivery, and performance by
Borrower of the Loan Documents, and the use of the loan proceeds, shall not
violate any existing law or regulation applicable to Borrower; any ruling
applicable to Borrower of any court, arbitrator, or governmental agency or body
of any kind; Borrower's articles of incorporation or bylaws; any security
issued by Borrower; or any mortgage, indenture, lease, contract, undertaking,
or other agreement to which Borrower is a party or by which Borrower or any of
its property may be bound.
5.4 Financial Information. By submitting each of the financial
statements required by Subsection 6.6(a) and 6.6(b), Borrower is deemed to
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represent and warrant that: (a) such statement is complete and correct and
fairly presents the financial condition of Borrower as of the date of such
statement; (b) such statement discloses all liabilities of Borrower that are
required to be reflected or reserved against under GAAP, whether liquidated or
unliquidated, fixed or contingent; and (c) such statement has been prepared in
accordance with GAAP. As of this date, there has been no adverse change in
Borrower's financial condition since preparation of the last such financial
statements delivered to Bank which would materially impair Borrower's ability
to repay the Obligations.
5.5 Liens and Encumbrances. Borrower and each Subsidiary has
sufficient title to each of its assets in order to conduct its respective
business as presently conducted and as contemplated to be conducted; all of the
leases, subleases, licenses, claims, rights, concessions, and agreements
material to the business of Borrower or any Subsidiary, and under which
Borrower or any Subsidiary holds any properties, are in full force and effect
and neither Borrower nor any Subsidiary has any notice of any material claim of
any sort that has been asserted by anyone adverse to the rights of Borrower or
any Subsidiary under any such lease, sublease, license, claim, concession, or
agreement, or affecting or questioning the rights of Borrower or such
Subsidiary to the continued possession of the premises under any such lease,
sublease, license, claim, concession, or agreement.
5.6 Litigation. Except as disclosed in writing to Bank, there is
no threatened (to Borrower's knowledge) or pending litigation, investigation,
arbitration, or administrative action which may materially adversely affect
Borrower's business, property, operations, or financial condition.
5.7 Payment of Taxes. Borrower has filed or caused to be filed
all tax returns when required to be filed; and has paid all taxes, assessments,
fees, licenses, excise taxes, franchise taxes, governmental liens, penalties,
and other charges levied or assessed against Borrower or any of its property
imposed on it by any governmental authority, agency, or instrumentality that
are due and payable (other than those returns or payments of which the amount,
enforceability, or validity are contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP are
provided on Borrower's books).
5.8 Employee Benefit Plan. Borrower is in compliance in all
respects with the provisions of ERISA and the regulations and published
interpretations thereunder. Borrower has not engaged in any acts or omissions
which would make
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Borrower liable to the Plan, to any of its participants, or to the Internal
Revenue Service, under ERISA.
5.9 Misrepresentations. No information, exhibits, data, or
reports furnished by Borrower or delivered to Bank in connection with
Borrower's application for credit misstates any material fact, or omits any
fact necessary to make such information, exhibits, data, or reports not
misleading.
5.10 No Default. Borrower is not in default in any Loan Document,
or in any contract, agreement, or instrument to which it is a party.
5.11 No Burdensome Restrictions. No contract or other instrument
to which Borrower is a party, or order, award, or decree of any court,
arbitrator, or governmental agency, materially impairs Borrower's ability to
repay the Obligations.
ARTICLE 6
AFFIRMATIVE COVENANTS
So long as this Agreement shall remain in effect, or any liability
exists under the Loan Documents, Borrower shall:
6.1 Use of Proceeds. Use the Letters of Credit to back
reclamation and surety bonds, primarily for the Golden Cross Mine in New
Zealand, and for other general corporate purposes in the ordinary course of
Borrower's business.
6.2 Tangible Net Worth. Maintain a Tangible Net Worth of not less
than $150,000,000 measured semiannually as of the second quarter end and the
fiscal year end.
6.3 Current Ratio. Maintain a ratio of Current Assets to Current
Liabilities of not less than 2.0 to 1, measured semiannually as of the second
quarter end and the fiscal year end.
6.4 Debt Ratio. Maintain a ratio of Indebtedness to Tangible Net
Worth of not more than 2.0 to 1, measured semiannually as of the second quarter
end and the fiscal year end.
6.5 Cash Collateral. Fully cash-collateralize all outstanding
Letters of Credit by placing immediately available funds in a
non-interest-bearing bank control account at Bank, pledged to Bank, if at any
time Borrower's Cash Equivalents becomes, or would become, as a result of any
contemplated transaction, less than $50,000,000, such collateralization to be
effected prior to consummation of such transaction.
6.6 Financial Information. Maintain a standard system of
accounting in accordance with GAAP and furnish to Bank the following:
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(a) Quarterly Financial Statements. As soon as available
and, in any event, within 60 days after the end of each fiscal quarter
of each fiscal year, a copy of the consolidated statement of
operations of Borrower for the quarter and for the current fiscal year
through such quarter, and for each such quarter a copy of the
consolidated balance sheet, consolidated statement of shareholders'
equity, and consolidated statement of cash flow of Borrower as of the
end of such quarter, setting forth, in each case, in comparative form,
figures for the corresponding period of the preceding fiscal year, all
in reasonable detail and satisfactory in scope to Bank, prepared by
the chief financial officer of Borrower, and in form and substance
satisfactory to Bank;
(b) Annual Financial Statements. As soon as available
and, in any event, within 90 days after the end of each fiscal year, a
copy of the consolidated balance sheet, consolidated statement of
operations, consolidated statement of shareholders' equity, and
consolidated statement of cash flow of Borrower for such year, setting
forth in each case, in comparative form, corresponding figures from
the preceding annual statements, each audited by Ernst and Young or
one of the other "Big 6" independent certified public accounting
firms, certifying that such statement is complete and correct, fairly
presents without qualification the financial condition of Borrower for
such period, is prepared in accordance with GAAP, and has been audited
in conformity with generally accepted auditing standards;
(c) Other Certificates. By February 1 and August 1 of
each year, a certificate of the chief financial officer of Borrower,
in the form of Exhibit A attached, as to the semiannual period most
recently ended; and
(d) Additional Financial Information. As soon as
available and, in any event, within ten days after request, such other
data, information, or documentation as Bank may reasonably request.
6.7 Maintenance of Existence. Preserve and maintain its
existence, powers, and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified in each jurisdiction in which its presence is
necessary or desirable in view of its business, operations, or ownership of its
property. Borrower shall also maintain and preserve all of its property which
is necessary or useful in the proper course of its business, in good working
order and condition, ordinary wear and tear excepted.
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6.8 Books and Records. Keep accurate and complete books,
accounts, and records in which complete entries shall be made in accordance
with GAAP, reflecting all financial transactions of Borrower.
6.9 Ownership of Guarantors. Continue to own and hold, directly
or indirectly, and free and clear of all liens or other encumbrances, all of
the outstanding shares of capital stock of each Guarantor.
6.10 Access to Premises and Records. At all reasonable times and
as often as Bank may reasonably request, permit any authorized representative
designated by Bank to have access to the premises, property, and financial
records of Borrower, including all records relating to the finances,
operations, and procedures of Borrower, and to make copies of or abstracts from
such records.
6.11 Notice of Events. Furnish Bank prompt written notice of:
(a) Proceedings. Any proceeding instituted by or against
Borrower in any court or before any commission or regulatory body, or
any proceeding threatened against it in writing by any governmental
agency which if adversely determined would have a material adverse
effect on Borrower's business, property, or financial condition, or
where the amount involved is $1,000,000 or more and not covered by
insurance;
(b) Material Development. Any material development in
any such proceeding referred to in Subsection 6.11(a);
(c) Defaults. Any action, event, or condition which is
or, with notice or lapse of time or both, would constitute a Default,
or a default under any other agreement to which Borrower is a party;
and
(d) Adverse Effect. Any other action, event, or
condition of any nature which could result in a material adverse
effect on the business, property, or financial condition of Borrower.
6.12 Payment of Debts and Taxes. Pay all Debt and perform all
obligations promptly and in accordance with their terms, and pay and discharge
promptly all taxes, assessments, and governmental charges or levies imposed
upon Borrower, its property, or revenues prior to the date on which penalties
attach thereto, as well as all lawful claims for labor, material, supplies, or
otherwise which, if unpaid, might become a lien or charge upon Borrower's
property. Borrower shall not, however, be required to pay or discharge any
such tax, assessment, charge, levy, or claim so long as its enforceability,
amount, or validity is contested in good faith by appropriate proceedings.
6.13 Environmental Matters.
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(a) Use and operate all of its facilities and properties
in material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses, and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) immediately notify Bank and provide copies upon
receipt of all written material claims, complaints, notices, or
inquiries relating to the condition of its facilities and properties
or compliance with Environmental Laws; and
(c) provide such information and certifications which
Bank may reasonably request from time to time to evidence compliance
with this Section.
6.14 Insurance. Maintain commercially adequate levels of coverage
with financially sound and reputable insurers, including, without limitation:
(a) Property Insurance. Insurance on all property of a
character usually insured by organizations engaged in the same or
similar type of business as Borrower against all risks, casualties,
and losses through extended coverage or otherwise and of the kind
customarily insured against by such organizations;
(b) Liability Insurance. Public liability insurance
against tort claims which may be asserted against Borrower; and
(c) Additional Insurance. Such other insurance as may be
required by law.
6.15 Additional Guarantors. If at any time or from time to time
Borrower shall, directly or indirectly, acquire any Subsidiary which is a
Significant Subsidiary; or if any existing Subsidiary shall become a
Significant Subsidiary, then, at such time, Borrower shall cause such
Subsidiary (a) to execute and deliver to Bank a guaranty of the Obligations, in
form satisfactory to Bank, together with a certified copy of a resolution of
such Subsidiary's board of directors, satisfactory in form to Bank, authorizing
its guaranty; and such Subsidiary shall thereafter be deemed an "Additional
Guarantor" under this Agreement.
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ARTICLE 7
EVENTS AND CONSEQUENCES OF DEFAULT
7.1 Events of Default. Any of the following events shall, at the
option of Bank and at any time without regard to any previous knowledge on the
part of Bank, constitute a default by Borrower under the terms of this
Agreement, the L/C Agreements, and all other Loan Documents ("Default"):
(a) Nonpayment. Any payment or reimbursement due or
demanded under this Agreement or any Loan Document is not made within
five days of the date when due;
(b) Breach of Warranty. Any representation or warranty
made in connection with this Agreement or any other Loan Document, or
any certificate, notice, or report furnished pursuant hereto, is
determined by Bank to be false in any respect when made, and is relied
upon by Bank to its detriment;
(c) ERISA. Borrower shall engage in any act or omission
which would make Borrower liable under ERISA to the Plan, to any of
its participants, or to the Internal Revenue Service, if such
liability would materially adversely affect Borrower's financial
condition;
(d) Failure to Perform. Any other term, covenant, or
agreement contained in any Loan Document is not performed or
satisfied, and, if remediable, such failure continues unremedied for
30 days after written notice thereof has been given to Borrower by
Bank;
(e) Defaults on Other Obligations. There exists a
default in the performance of any other agreement or obligation for
the payment of borrowed money, for the deferred purchase price of
property or services, or for the payment of rent under any lease,
whether by acceleration or otherwise, which would permit such
obligation to be declared due and payable prior to its stated
maturity; and such default continues for 30 days after Borrower
receives written notice thereof from the creditor so affected;
(f) Guaranties. Any guarantor of all or any portion of
the Obligations revokes or attempts to revoke such guaranty, whether
with respect to future transactions or outstanding Obligations, or
otherwise breaches the terms and conditions of such guaranty;
(g) Loss, Destruction, or Condemnation of Property. A
portion of Borrower's property is affected by any uninsured loss,
damage, destruction, theft, sale, or encumbrance other than created
herein or is
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condemned, seized, or appropriated, the effect of which materially
impairs Borrower's financial condition or its ability to pay its debts
as they come due;
(h) Attachment Proceedings and Insolvency. Borrower or
any of Borrower's property is affected by any:
(i) Judgment lien, execution, attachment,
garnishment, general assignment for the benefit of creditors,
sequestration, or forfeiture, to the extent Borrower's
financial condition or its ability to pay its debts as they
come due is thereby materially impaired; or
(ii) Proceeding under the laws of any jurisdiction
relating to receivership, insolvency, or bankruptcy, whether
brought voluntarily or involuntarily by or against Borrower,
including, without limitation, any reorganization of assets,
deferment or arrangement of debts, or any similar proceeding,
and, if such proceeding is involuntarily brought against
Borrower, it is not dismissed within 60 days;
(i) Judgments. Final judgment on claims not covered by
insurance which, together with other outstanding final judgments
against Borrower, exceeds $1,000,000, is rendered against Borrower and
is not discharged, vacated, or reversed, or its execution stayed
pending appeal, within 60 days after entry, or is not discharged
within 60 days after the expiration of such stay; or
(j) Government Approvals. Any governmental approval,
registration, or filing with any governmental authority, now or later
required in connection with the performance by Borrower of its
obligations under the Loan Documents, is revoked, withdrawn, or
withheld, or fails to remain in full force and effect, except Borrower
shall have 60 days after notice of any such event to take whatever
action is necessary to obtain all necessary approvals, registrations,
and filings.
7.2 Remedies Upon Default. If any Default occurs and is
continuing, Bank may at its option, by notice to Borrower:
(a) Terminate Commitments. Terminate Bank's commitment
to issue new Letters of Credit;
(b) Suspend Commitments. Refuse to issue new Letters of
Credit until any Default has been cured;
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(c) Setoff. Exercise its right of setoff against any
cash collateral pledged to Bank or any other deposit accounts of
Borrower with Bank; and/or
(d) All Remedies. Pursue any other available legal and
equitable remedies.
All of Bank's rights and remedies in all Loan Documents shall be cumulative and
can be exercised separately or concurrently.
7.3 Alleged Default by Bank. In the event that Borrower at any
time concludes that Bank has defaulted in any respect under this Agreement or
any of the Loan Documents, Borrower shall promptly give notice thereof to Bank
and provide Bank with a period of not less than 30 days in which to cure such
alleged default; provided, however, that in no event shall this Section 7.3 or
the Borrower's giving such notice to Bank extend the time period(s) granted to
the Borrower to cure any Default under Section 7.1(d). Failure of the Borrower
to provide such notice to Bank shall waive the Borrower's right to assert a
claim against Bank for such alleged default.
ARTICLE 8
MISCELLANEOUS
8.1 Manner of Payments.
(a) Payments on Nonbusiness Days. Whenever any event is
to occur or any payment is to be made under any Loan Document on any
day other than a Business Day, such event may occur or such payment
may be made on the next succeeding Business Day and such extension of
time shall be included in computation of interest in connection with
any such payment.
(b) Payments. All payments and prepayments to be made by
Borrower shall be made to Bank when due, at Bank's office as may be
designated by Bank, without offsets or counterclaims for any amounts
claimed by Borrower to be due from Bank, in U.S. dollars and in
immediately available funds.
(c) Application of Payments. All payments made by
Borrower shall be applied first against fees, expenses, and
indemnities due; second, against interest due; and third, against
principal, with Bank having the right, after a Default which is
continuing, to apply any payments or collections received against any
one or more of the Obligations in any manner which Bank may choose.
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(d) Recording of Payments. Bank is authorized to record
on a schedule or computer-generated statement the date and amount of
each draw under a Letter of Credit, and all payments of principal and
interest. All such schedules or statements shall constitute prima
facie evidence of the accuracy of the information so recorded.
8.2 Notices. All notices, demands, and other communications to be
given pursuant to any of the Loan Documents shall be in writing and shall be
deemed received the earlier of when actually received, or two days after being
mailed, postage prepaid and addressed as follows, or as later designated in
writing:
BANK: BORROWER:
SEATTLE-FIRST NATIONAL BANK COEUR D'ALENE MINES CORPORATION
Eastern Commercial Banking 400 Coeur d'Alene Mines Building
West 601 Riverside Avenue 505 Front Avenue, P.O. Box I
Spokane, WA 99210 Coeur d'Alene, Idaho 83814
Attention: Kurt L. Walsdorf Attention: James Sabala
8.3 Documentation and Administration Expenses. Borrower shall
pay, reimburse, and indemnify Bank for all of Bank's reasonable costs and
expenses, including, without limitation, all accounting, appraisal, and report
preparation fees or expenses, all recording or filing fees, and all normal,
reasonable, and customary attorneys' fees (including the allocated cost of
in-house counsel) and legal expenses incurred in connection with the
negotiation, preparation, execution, and administration of this Agreement and
all other Loan Documents, and all amendments, supplements, or modifications
thereto, and the perfection of all security interests, liens, or encumbrances
that may be granted to Bank. Borrower acknowledges that any legal counsel
retained or employed by Bank acts solely on the Bank's behalf and not on
Borrower's behalf, despite Borrower's obligation to reimburse Bank for the cost
of such legal counsel, and that Borrower has had sufficient opportunity to seek
the advice of its own legal counsel with regard to this Agreement.
8.4 Collection Expenses. The nonprevailing party shall, upon
demand by the prevailing party, reimburse the prevailing party for all of its
costs, expenses, and reasonable attorneys' fees (including the allocated cost
of in-house counsel) incurred in connection with any controversy or claim
between said parties relating to this Agreement or any of the other Loan
Documents, or to an alleged tort arising out of the transactions evidenced by
this Agreement, including those incurred in any action, bankruptcy proceeding,
arbitration or
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other alternative dispute resolution proceeding, or appeal, or in the course of
exercising any judicial or nonjudicial remedies.
8.5 Waiver. No failure to exercise and no delay in exercising,
on the part of Bank, any right, power, or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege hereunder preclude any other or further exercise thereof, or the
exercise of any other right, power, or privilege. Further, no waiver or
indulgence by Bank of any Default shall constitute a waiver of Bank's right to
declare a subsequent similar failure or event to be a Default.
8.6 Assignment. This Agreement is made expressly for the sole
benefit of Borrower and for the protection of Bank and its successors and
assigns. The rights of Borrower hereunder shall not be assignable by operation
of law or otherwise, without the prior written consent of Bank.
8.7 Merger. The rights and obligations set forth in this
Agreement shall not merge into or be extinguished by any of the Loan Documents,
but shall continue and remain valid and enforceable. This Agreement and the
other Loan Documents constitute Bank's entire agreement with Borrower, and
supersede all prior writings and oral negotiations. No oral or written
representation, covenant, commitment, waiver, or promise of either Bank or
Borrower shall have any effect, whether made before or after the date of this
Agreement, unless contained in this Agreement or another Loan Document, or in
an amendment complying with Section 8.8. ORAL AGREEMENTS OR ORAL COMMITMENTS
TO LOAN MONEY, TO EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A
DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
8.8 Amendments. Any amendment or waiver of, or consent to any
departure by Borrower from any provision of, this Agreement shall be in writing
signed by each party to be bound thereby, and shall be effective only in the
specific instance and for the specific purpose for which given.
8.9 Mandatory Arbitration.
(a) At the request of either Bank or Borrower, any
controversy or claim between Bank and Borrower, arising from or
relating to this Agreement or any of the other Loan Documents, or
arising from an alleged tort, shall be settled by arbitration in
Seattle, Washington. The United States Arbitration Act shall apply
even though this Agreement is otherwise governed by Washington law.
The proceedings shall be administered by the American Arbitration
Association under its commercial rules of arbitration. Any
controversy over whether an issue is arbitrable shall be
- 17 -
<PAGE> 21
determined by the arbitrator(s). Judgment upon the arbitration award
may be entered in any court having jurisdiction over the parties. The
institution and maintenance of an action for judicial relief or
pursuit of an ancillary or provisional remedy shall not constitute a
waiver of the right of either party, including the plaintiff, to
submit the controversy or claim to arbitration if such action for
judicial relief is contested. For purposes of the application of the
statute of limitations, the filing of an arbitration pursuant to this
subsection is the equivalent of the filing of a lawsuit, and any claim
or controversy which may be arbitrated under this subsection is
subject to any applicable statute of limitations. The arbitrator(s)
will have the authority to decide whether any such claim or
controversy is barred by the statute of limitations and, if so, to
dismiss the arbitration on that basis. The parties consent to the
joinder of any guarantor, hypothecator, or other party having an
interest relating to the claim or controversy being arbitrated in any
proceedings under this Section.
(b) Notwithstanding the provisions of subsection 8.9(a),
no controversy or claim shall be submitted to arbitration without the
consent of all parties if at the time of the proposed submission, such
controversy or claim arises from or relates to an obligation secured
by real property.
(c) No provision of this subsection shall limit the right
of Borrower or Bank to exercise self-help remedies such as set-off,
foreclosure, retention or sale of any collateral, or obtaining any
ancillary, provisional, or interim remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration
proceeding. The exercise of any such remedy does not waive the right
of either party to request arbitration.
8.10 Construction. Each term of this Agreement and each Loan
Document shall be binding to the extent permitted by law and shall be governed
by the laws of the State of Washington, excluding its conflict of laws rules.
If one or more of the provisions of this Agreement should be invalid, illegal,
or unenforceable in any respect, the remaining provisions of this Agreement
shall remain effective and enforceable. If there is a conflict among the
provisions of any Loan Documents, the provisions of this Agreement shall be
controlling. The captions and organization of this Agreement are for
convenience only, and shall not be construed to affect any provision of this
Agreement.
- 18 -
<PAGE> 22
8.11 Termination of Agreement. All obligations of Borrower under
this Agreement shall remain in full force and effect until (a) no Letters of
Credit remain outstanding, (b) all Obligations have been paid in full and (c)
Bank has no further obligation to issue Letters of Credit; at which time all
obligations of both Bank and Borrower under this Agreement shall terminate, and
all security interests held by Bank shall be deemed released. Bank shall at
such time, upon demand by Borrower, execute all documents of release or
satisfaction necessary to clear title to any collateral.
DATED this 8th day of June 1994.
BORROWER: BANK:
COEUR D'ALENE MINES CORPORATION SEATTLE-FIRST NATIONAL BANK
By /s/ JAMES A. SABALA By [sig]
--------------------------- -----------------------------
Title Sr. Vice President Title Vice President
------------------------ --------------------------
- 19 -
<PAGE> 23
EXHIBIT A TO CREDIT AGREEMENT
[Form of Certificate to be sent with financial reports]
[Date]
Seattle-First National Bank
Eastern Commercial Banking
West 601 Riverside Avenue
Spokane, WA 99210
Attention: Kurt L. Walsdorf
Re: Certificate of Chief Financial Officer
Ladies and Gentlemen:
With respect to that certain Credit Agreement between Coeur d'Alene Mines
Corporation ("Borrower") and Seattle-First National Bank ("Bank") dated
_____________, 1994 (the "Agreement"), we hereby represent to you the following
(capitalized terms used in this certificate shall have the same meaning as in
the Agreement):
Enclosed are financial statements required by Section 6.6 of the Agreement. As
of the date of such financial statements:
1. Borrower's Tangible Net Worth is $__________________.
2. Borrower's ratio of Current Assets to Current Liabilities is
___________.
3. Borrower's ratio of Debt to Tangible Net Worth is _____________.
4. Borrower's Cash Equivalents are $__________________.
Such financial statements are complete and correct, fairly present, without
qualification, the financial condition of Borrower for such period, and are
prepared in accordance with GAAP;
No Default exists, nor any event which, with lapse of time or upon the giving
of notice would constitute a Default under the Agreement.
Sincerely,
COEUR D'ALENE MINES CORPORATION
By
---------------------------
Chief Financial Officer
<PAGE> 24
COMMERCIAL GUARANTY
<TABLE>
<S> <C>
Borrower: COEUR D'ALENE MINES CORPORATION Lender: SEATTLE-FIRST NATIONAL BANK
P.O. BOX 1 EASTERN COMMERCIAL TEAM 1/SPOKANE 56
COEUR D'ALENE, ID 83814 C/O CLSC-E (DOC'S)
P.O. BOX 1446 (SFC-5)
SPOKANE, WA 99210-1630
Guarantor: COEUR GOLD NEW ZEALAND, LIMITED
400 COEUR D'ALENE MINES BLDG, 505 FRONT STREET
COEUR D'ALENE, ID 83814
</TABLE>
AMOUNT OF GUARANTY. THE AMOUNT OF THIS GUARANTY IS UNLIMITED.
CONTINUING UNLIMITED GUARANTY. FOR GOOD AND VALUABLE CONSIDERATION, COEUR GOLD
NEW ZEALAND, LIMITED ("GUARANTOR") ABSOLUTELY AND UNCONDITIONALLY GUARANTEES
AND PROMISES TO PAY TO SEATTLE-FIRST NATIONAL BANK ("LENDER") OR ITS ORDER, IN
LEGAL TENDER OF THE UNITED STATES OF AMERICA, THE INDEBTEDNESS (AS THAT TERM IS
DEFINED BELOW) OF COEUR D'ALENE MINES CORPORATION ("BORROWER") TO LENDER ON THE
TERMS AND CONDITIONS SET FORTH IN THIS GUARANTY. UNDER THIS GUARANTY, THE
LIABILITY OF GUARANTOR IS UNLIMITED AND THE OBLIGATIONS OF GUARANTOR ARE
CONTINUING.
DEFINITIONS. The following words shall have the following meanings when used
in this Guaranty:
BORROWER. The word "Borrower" means COEUR D'ALENE MINES CORPORATION.
GUARANTOR. The word "Guarantor" means COEUR GOLD NEW ZEALAND, LIMITED.
GUARANTY. The word "Guaranty" means this Guaranty between Guarantor
and Lender dated June 2,1994.
INDEBTEDNESS. The word "Indebtedness" means all of Borrower's
indebtedness to Lender in its most comprehensive sense and includes
without limitation all indebtedness, whether now or hereafter
existing, whether arising from loan advances, interest, debts, lease
obligations, other obligations, or liabilities of Borrower, or any of
them, including judgments against Borrower, heretofore, now, or
hereafter made, incurred, or created; whether voluntarily or
involuntarily and however arising; whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others, or
primarily or secondarily, or as guarantor or surety; whether recovery
upon such indebtedness may be or hereafter may become barred by any
statute of limitations; and whether such indebtedness may be or
hereafter may become otherwise unenforceable, and whether such
indebtedness arises from transactions which may be voidable on account
of infancy, insanity, ultra vires, or otherwise.
LENDER. The word "Lender" means SEATTLE-FIRST NATIONAL BANK, its
successors and assigns.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. Guarantor
intends to guarantee at all times the performance and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of all
Indebtedness. Accordingly, no payments made upon the Indebtedness will
discharge or diminish the continuing liability of Guarantor in connection with
any remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter incurred or contracted.
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue in full force until such time as Guarantor
notifies Lender in writing of Guarantor's election to revoke this Guaranty.
Guarantors written notice of revocation must be delivered to Lender at the
address of Lender listed above or such other place as Lender may designate in
writing. Written revocation of this Guaranty will apply only to advances or
new Indebtedness created after actual receipt by Lender of Guarantors written
revocation. This Guaranty will continue to bind Guarantor for all Indebtedness
incurred by Borrower or committed by Lender prior to receipt of Guarantors
written notice of revocation, including any extension, renewal, or modification
of the Indebtedness. If Lender has extended credit to Borrower in the form of
one or more credit card accounts, Guarantor's promise with respect to
Borrower's Indebtedness under these accounts shall remain effective until
Lender actually receives at its Bankcard Services both of the following: (a)
written notice that Guarantor withdraws Guarantor's promise with respect to
credit card Indebtedness and (b) all cards issued under these credit card
accounts. Any renewals, extensions, and modifications of the Indebtedness
which are granted after Guarantors revocation are contemplated under this
Guaranty and specifically will not be considered new Indebtedness. This
Guaranty shall bind the estate of Guarantor as to Indebtedness created both
before and after the death or incapacity of Guarantor, regardless of Lender's
actual notice of Guarantor's death. Subject to the foregoing, Guarantor's
executor or administrator or other legal representative may terminate this
Guaranty in the same manner in which Guarantor might have terminated it and
with the same effect. Release of any other guarantor or termination of any
other guaranty of the Indebtedness shall not affect the liability of Guarantor
under this Guaranty. A revocation received by Lender from any one or more
Guarantors shall not affect the liability of any remaining Guarantors under
this Guaranty. IT IS ANTICIPATED THAT FLUCTUATIONS MAY OCCUR IN THE AGGREGATE
AMOUNT OF INDEBTEDNESS COVERED BY THIS GUARANTY, AND IT IS SPECIFICALLY
ACKNOWLEDGED AND AGREED BY GUARANTOR THAT REDUCTIONS IN THE AMOUNT OF
INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00), PRIOR TO WRITTEN REVOCATION OF THIS
GUARANTY BY GUARANTOR SHALL NOT CONSTITUTE A TERMINATION OF THIS GUARANTY.
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either
before or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT
LESSENING GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO TIME: (A)
PRIOR TO REVOCATION AS SET FORTH ABOVE, TO MAKE ONE OR MORE ADDITIONAL SECURED
OR UNSECURED LOANS TO BORROWER, TO LEASE EQUIPMENT OR OTHER GOODS TO BORROWER,
OR OTHERWISE TO EXTEND ADDITIONAL CREDIT TO BORROWER; (B) TO ALTER, COMPROMISE,
RENEW, EXTEND, ACCELERATE, OR OTHERWISE CHANGE ONE OR MORE TIMES THE TIME FOR
PAYMENT OR OTHER TERMS OF THE INDEBTEDNESS OR ANY PART OF THE INDEBTEDNESS,
INCLUDING INCREASES AND DECREASES OF THE RATE OF INTEREST ON THE INDEBTEDNESS;
EXTENSIONS MAY BE REPEATED AND MAY BE FOR LONGER THAN THE ORIGINAL LOAN TERM;
(C) TO TAKE AND HOLD SECURITY FOR THE PAYMENT OF THIS GUARANTY OR THE
INDEBTEDNESS, AND EXCHANGE, ENFORCE, WAIVE, FALL OR DECIDE NOT TO PERFECT, AND
RELEASE ANY SUCH SECURITY, WITH OR WITHOUT THE SUBSTITUTION OF NEW COLLATERAL;
(D) TO RELEASE, SUBSTITUTE, AGREE NOT TO SUE, OR DEAL WITH ANY ONE OR MORE OF
BORROWER'S SURETIES, ENDORSERS, OR OTHER GUARANTORS ON ANY TERMS OR IN ANY
MANNER LENDER MAY CHOOSE; (E) TO DETERMINE HOW, WHEN AND WHAT APPLICATION OF
PAYMENTS AND CREDITS SHALL BE MADE ON THE INDEBTEDNESS; (F) TO APPLY SUCH
SECURITY AND DIRECT THE ORDER OR MANNER OF SALE THEREOF, INCLUDING WITHOUT
LIMITATION, ANY NONJUDICIAL SALE PERMITTED BY THE TERMS OF THE CONTROLLING
SECURITY AGREEMENT OR DEED OF TRUST, AS LENDER IN ITS DISCRETION MAY DETERMINE;
(G) TO SELL, TRANSFER, ASSIGN, OR GRANT PARTICIPATIONS IN ALL OR ANY PART OF
THE INDEBTEDNESS; AND (H) TO ASSIGN OR TRANSFER THIS GUARANTY IN WHOLE OR IN
PART.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate,
transfer, or otherwise dispose of all or substantially all of Guarantor's
assets, or any interest therein; (d) Lender has made no representation to
Guarantor as to the creditworthiness of Borrower; (e) upon Lender's request,
Guarantor will provide to Lender financial and credit
<PAGE> 25
COMMERCIAL GUARANTY PAGE 2
(CONTINUED)
information in form acceptable to Lender, and all such financial information
provided to Lender is true and correct in all material respects and fairly
presents the financial condition of Guarantor as of the dates thereof, and no
material adverse change has occurred in the financial condition of Guarantor
since the date of the financial statements and (f) Guarantor has established
adequate means of obtaining from Borrower on a continuing basis information
regarding Borrower's financial condition. Guarantor agrees to keep adequately
informed from such means of any facts, events, or circumstances which might in
any way affect Guarantor's risks under this Guaranty, and Guarantor further
agrees that, absent a request for information, Lender shall have no obligation
to disclose to Guarantor any information or documents acquired by Lender in the
course of its relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to pursue
any other remedy within Lender's power; or (f) to commit any act or omission of
any kind, or at any time, with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower,
by subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of (a)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (b)
any election of remedies by Lender which destroys or otherwise adversely
affects Guarantor's subrogation rights or Guarantor's rights to proceed against
Borrower for reimbursement, including without limitation, any loss of rights
Guarantor may suffer by reason of any law limiting, qualifying, or discharging
the Indebtedness; (c) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal
tender, of the Indebtedness; (d) any right to claim discharge of the
Indebtedness on the basis of unjustified impairment of any collateral for the
Indebtedness; (e) any statute of limitations, if at any time any action or suit
brought by Lender against Guarantor is commenced there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable
statute of limitations; or (f) any defenses given to guarantors at law or in
equity other than actual payment and performance of the Indebtedness. If
payment is made by Borrower, whether voluntarily or otherwise, or by any third
party, on the Indebtedness and thereafter Lender is forced to remit the amount
of that payment to Borrower's trustee in bankruptcy or to any similar person
under any federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of this
Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy, by an assignment for the benefit of creditors,
by voluntary liquidation, or otherwise, the assets of Borrower applicable to
the payment of the claims of both Lender and Guarantor shall be paid to Lender
and shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower lo Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender hereby is authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions
as Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty,
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Guaranty. No alteration of or
amendment to this Guaranty shall be effective unless given in writing
and signed by the party or parties sought to be charged or bound by
the alteration or amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and
accepted by Lender in the State of Washington. If there is a lawsuit,
Guarantor agrees upon Lender's request to submit to the jurisdiction
of the courts situated in King County, State of Washington. This
Guaranty shall governed by and construed in accordance with the laws
of the State of Washington.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this
Guaranty. Lender may pay someone else to help enforce this Guaranty,
and Guarantor shall pay the costs and expenses of such enforcement.
Costs and expenses include Lender's attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees
and legal expenses for bankruptcy proceedings (and including efforts
to modify or vacate any automatic stay or injunction), appeals, and
any anticipated post-judgment collection services. Guarantor also
shall pay all court costs and such additional fees as may be directed
by the court.
NOTICES. Except for revocation notices by Guarantor, all notices
required to be given by either party to the other under this Guaranty
shall be in writing and shall be effective when actually delivered or
when deposited in the United States mail, first class postage prepaid,
addressed to the party to whom the notice is to be given at the
address shown above or to such other addresses as either party may
designate to the other in writing. All revocation notices by
Guarantor shall be in writing and shall be effective only upon deliver
to Lender as provided above in the section titled "DURATION OF
GUARANTY." If there is more than one Guarantor, notice to any
Guarantor will constitute notice to all Guarantors. For
notice purposes, Guarantor agrees to keep Lender informed at all times
of Guarantor's current address.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall
be deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower
named in this
<PAGE> 26
COMMERCIAL GUARANTY PAGE 3
(CONTINUED)
Guaranty or when this Guaranty is executed by more than one Guarantor,
the words "Borrower" and "Guarantor" respectively shall mean all and
any one or more of them. The words "Guarantor," "Borrower," and
"Lender" include the heirs, successors, assigns, and transferees of
each of them. Caption headings in this Guaranty are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Guaranty. If a court of competent jurisdiction
finds any provision of this Guaranty to be invalid or unenforceable as
to any person or circumstance, such finding shall not render that
provision invalid or unenforceable as to any other persons or
circumstances, and all provisions of this Guaranty in all other
respects shall remain valid and enforceable. It any one or more of
Borrower or Guarantor are corporations or partnerships, it is not
necessary for Lender to inquire into the powers of Borrower or
Guarantor or of the officers, directors, partners, or agents acting or
purporting to act on their behalf, and any Indebtedness made or
created in reliance upon the professed exercise of such powers shall
be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under
this Guaranty unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Guaranty shall not prejudice
or constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this
Guaranty. No prior waiver by Lender, nor any course of dealing
between Lender and Guarantor, shall constitute a waiver of any of
Lender's rights or of any of Guarantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Guaranty, the granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS
OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR
UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND
DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL
TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY."
NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.
THIS GUARANTY IS DATED JUNE 2, 1994.
GUARANTOR:
COEUR GOLD NEW ZEALAND, LIMITED
By: /s/ JAMES A. SABALA By:
--------------------- ------------------------------
Authorized Signer Authorized Signer
<PAGE> 27
SECRETARY'S CERTIFICATE
The undersigned, Secretary of Coeur d'Alene Mines Corporation, Coeur
Alaska, Inc. , CDE Chilean Mining Corporation, Callahan Mining Corporation,
Coeur Gold New Zealand Limited, Coeur New Zealand, Inc. and Coeur Rochester,
Inc., hereby certifies that the Resolutions set forth below were duly adopted
at a regular meeting of the Board of Directors of Coeur d'Alene Mines
Corporation held on December 14, 1993:
RESOLVED, that Coeur d'Alene Mines Corporation and its subsidiaries' 1994
Budget presented to the Board at this meeting is hereby approved and adopted,
it being understood that said Budget specifically includes the lease financing
of certain equipment for use at the Rochester Mine.
FURTHER RESOLVED that the appropriate officers of Coeur d'Alene Mines
Corporation and its subsidiaries are authorized to take all steps, and to
execute all documents, including contracts, guarantees, bank and financial
institution agreements and authorizations, permits, deeds and any other
instruments which may be necessary to carry out the business of the company and
its subsidiaries as contemplated by the 1994 Budget; and such officers shall
have the authority to effect transactions that do not materially depart from
such Budget.
FURTHER RESOLVED that the Chairman, Chief Executive Officer and President,
the Senior Vice President-Chief Financial Officer, the Senior Vice
President-Operations, and the Secretary of the company and its subsidiaries are
hereby authorized to, severally or jointly as is appropriate to their customary
duties and the transactions involved, provide certificates to third parties as
evidence of the authorization by the Board to carry out the business and
affairs of Coeur d'Alene Mines Corporation and its subsidiaries as provided in
these Resolutions, which certificates may include a representation that the
particular transaction is contemplated by the 1994 Budget, and therefore
authorized by the Board, it being understood that third parties may rely upon
such certificate.
It is further certified that the Letters of Credit which are the subject
of that certain Credit Agreement between Coeur d'Alene Mines Corporation and
Seattle-First National Bank dated June 8, 1994, are contemplated by the 1994
Budget referred to in the foregoing resolutions, and that James A. Sabala is
the Senior Vice President - Chief Financial Officer of Coeur d'Alene Mines
Corporation and the Vice President of each of the subsidiaries listed above,
and is the officer who, as a part of his customary duties, executes bank credit
agreements and guaranties on behalf of Coeur d'Alene Mines Corporation and its
subsidiaries listed above.
It is further certified that the signature of James A. Sabala which
appears hereon is his true and accurate signature.
/s/ JAMES A. SABALA
-----------------------
<PAGE> 28
DATED this 8th day of June, 1994
/s/ WILLIAM F. BOYD
--------------------------------
William F. Boyd, Secretary
<PAGE> 29
DISCLOSURE OF LITIGATION
Pursuant to Paragraph 5.6 of that certain Credit Agreement between Coeur
d'Alene Mines Corporation and Seattle-First National Bank dated June 8, 1994,
Coeur d'Alene Mines Corporation hereby discloses certain litigation, as
follows:
1. Kassover suit, where a settlement of $5,875,000 has been
agreed upon, subject to Court approval. (See page 18 of the
1993 Form 10-K)
2. Callahan suit, where FN Enterprises claims it is due
approximately $900,000 (if interest is included) from Callahan
Mining Corporation for breach of contract. (See page 18 of the
1993 Form 10-K.)
3. Promissory note suit, where an estate seeks approximately
$1,000,000 (if interest is included) from Coeur d'Alene Mines
Corporation in connection with notes claimed to be owed. (See
page 19 of the 1993 Form 10-K.)
4. Bunker Hill superfund site, where a settlement has been agreed
upon, subject to Court approval, in the amount of $1,230,000.
(See page 16 of the 1993 Form 10-K.)
Dated this 8th day of June, 1994
/s/ WILLIAM F. BOYD
--------------------------------
William F. Boyd, Secretary
